MarketWatch: Home prices won’t bottom until next year: Zillow

REAL ESTATE WEEKLY
May 13, 2011, 4:28 p.m. EDT
Home prices won’t bottom until next year: Zillow

By MarketWatch

The first quarter proved rough on home prices, as U.S. home values fell 3% from the fourth quarter — the biggest quarterly decline since 2008, Zillow.com reported this week.

Values are down 29.5% from their June 2006 peak, pushing even more homeowners into negative equity territory, according to the report.

The bottom line is that the housing market may not hit a bottom in prices this year, at least on a national basis, said Stan Humphries, Zillow’s chief economist.

“Home-value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011,” Humphries said, in a news release.

“We did expect substantial payback from the home-buyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won’t see a bottom in home values until 2012 or later,” he said.

Read more real-estate news in this week’s pages, including why mortgage rates fell to their lowest level of the year this week and why Americans preparing for retirement need to consider what to do with their homes, as prices continue to collapse.

According to Zillow’s research, there were only a few bright spots where prices didn’t decline in the first quarter. Markets that saw modest price increases were Fort Myers, Fla., Champaign-Urbana, Ill. and Honolulu.

— Amy Hoak, Real Estate writer